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The CP523 Notice is issued by the IRS to notify taxpayers that their installment agreement is in default due to missed or incomplete payments. When an installment agreement defaults, the IRS considers the taxpayer’s account delinquent, potentially leading to enforced collection actions like levies or liens.
Key components of the CP523 Notice include:
- Explanation of Default
The notice details why the installment agreement is in default, often due to missed payments or failure to comply with IRS terms. A default may also occur if the taxpayer accrues new tax debt while the agreement is active. - Consequences of Default
If the taxpayer does not take action to reinstate the agreement, the IRS may:- Levy bank accounts or wages: The IRS may garnish wages or place levies on bank accounts to collect the debt.
- File a federal tax lien: The IRS may file a lien against the taxpayer’s property, restricting their ability to sell or refinance assets until the debt is resolved.
- Options for Reinstating the Agreement
The CP523 Notice provides steps for the taxpayer to reinstate the installment agreement. This may involve:- Paying overdue installments: Settling any missed payments to bring the agreement current.
- Requesting a modification: Taxpayers experiencing financial hardship can request a modification to lower their monthly payments.
- Timeline for Response
The notice includes a deadline by which the taxpayer must respond to prevent enforcement actions. Acting within this timeframe is crucial to avoid escalation of collection measures. - Importance to Tax Debt Resolution
Reinstating a defaulted installment agreement is vital for taxpayers who wish to avoid levies or liens. By acting on the CP523 Notice, taxpayers can maintain a manageable payment plan and continue working toward debt resolution without risking asset seizure.
The CP523 Notice emphasizes the importance of timely payments within an installment agreement, offering taxpayers a final opportunity to prevent enforcement actions.